U.S. consumer confidence unexpectedly improved in May, snapping a three-month slump as consumers expressed a more positive view of the job market and became more optimistic about jobs, the economy and their incomes in the coming months.
At the same time, consumers’ financial situations have worsened, they expect inflation and interest rates to rise, and fears of an economic recession have grown.
Tuesday’s data showed the Conference Board’s confidence index jumped to 102 from an upwardly revised 97.5 in April. Economists had expected a decline to 95.3.
The current situation index rose in May for the first time since January, while the expectations index rose the most since July.
The May consumer confidence index contradicts the University of Michigan’s consumer sentiment survey, which recorded a decline this month.
Despite the improvement, the expectations portion of the index has been in a range suggesting signs of a recession for four consecutive months.
“The survey also found that another recession is likely. Concerns. Is a US recession likely? Next 12 months “Consumer confidence rose again in May, with more consumers saying a recession is somewhat likely or very likely,” said Dana Peterson, chief economist at the Conference Board.
According to the Conference Board, plans to buy automobiles increased slightly for the second straight month but remained at “relatively depressed” levels. Plans to buy most big-ticket appliances increased for the first time in several months. There was renewed interest in buying smartphones, but purchase plans for other electronics remained steady.
Purchase plan based on 6-month moving averages Home prices were flat in May, the lowest level since August 2012. In a separate report, the Case-Shiller Home Price Index released Tuesday, showed home prices hit a record high in March.
Inflation remains a persistent issue, and consumers expect it to get worse and interest rates to remain high or even rise. The average 12-month inflation expectation rose to 5.4% from 5.3%. The percentage of consumers who expect interest rates to rise rose to 56.2% from 55.2%. Consumers’ assessment of their family’s financial situation both currently and over the next six months worsened slightly.
